Freakonomics Chapter1

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“Incentives are the cornerstone of modern life”(Levitt and Dubner 12). Levitt and Dubner once mentioned in their book “Freakonomics”. According to Oxford dictionary, incentives are something tends to incite to action or greater effort, as a reward offered for increased productivity (“incentives”). In business field, incentives are something given by bosses to encourage their employees to endeavour in bringing benefits to their business. For a simple example, the employee who hits the monthly or year sales target will get cash or prizes as incentives. Apparently, these incentives are something that motivates employees maintains their great performance and also to motivate other employee, whoever wants to get the incentives, work harder.…show more content…
According to their discovery, they found out that people likely to donate less blood rather than merely being praised for their unselfishness because they think “the stipend turned a noble act of charity into a painful way to make a few dollars and it was not worth it”(Levitt and Dubner10). But, if the organizer offers an incentive of $50, $500 or $5000, unquestionably there would have a lot of donors waiting for blood donation because they think the larger reward is worth than the pain. Undeniable, it is a common phenomenon in this materialistic world. There is an example in Freakonomics shows the different incentives are complementary. For instance, the moral incentive has been taking place when parents were frequently late for pick up their children from Israeli care centres in Haifa and the moral incentive is that the parents will feel guilty and shameful due to their unpunctuality. Therefore, it does discourage parents from being late while economists decided to test their solution by enacting the bill which is paying $3 fine per child for the late arriving parents. In this case, economic incentive have been taking place by moral incentive because the feeling of guilt that parents felt was cheaply replaced by $3 fine. After the fine was enacted, it was supposed to dissuade parents from arriving late but the number of late pickups went up drastically. This shows that the incentive was obviously backfired. In this case, both incentives are complementary
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